President Enrique Peña Nieto inaugurated Phase I of the new Los Ramones Gas Pipeline, which could by year end 2016 double the volume of gas the U.S. exports by pipeline to Mexico. Pipelines to Mexico already move a volume of gas equivalent to more than 16 million tonnes per year of LNG. Once Los Ramones reaches full capacity, U.S. gas producers will be able to export to Mexico more than seven times the annual gas volume that Osaka Gas and Chubu Electric—two of Freeport LNG’s largest LNG export customers—have signed up to purchase.

The first 116 km stage of the pipeline project links Agua Dulce, Texas, to Los Ramones, Nuevo Leon. Phase II of the project is a 738 km line from Los Ramones into Mexico’s industrial heartland, including San Luis Potosí, Guanajuato, and Querétaro. Phase II began construction in August 2014 and will likely enter commercial service by early 2016.

Ultimately, the Los Ramones pipeline system will provide a high-capacity conduit that can move 2 billion cubic feet per day (BCF/d) of Texas shale gas—primarily from the Eagle Ford play—into Mexico’s industrial northeast, including the economic powerhouse of Monterrey, as well as the expanding manufacturing hubs in the Central Mexican states listed above. For comparison, the Eagle Ford Shale presently produces approximately 6 BCF/d of natural gas, according to the EIA.

The U.S.-Mexico gas trade relationship is mutually beneficial. Affordable U.S. shale gas ensures that Mexico’s world-class light industry and manufacturing sectors enjoy competitively priced energy and electricity supplies. In return, Mexican demand for U.S. gas helps relieve the pressure on shale drillers from gas supply saturation in the U.S. domestic market. To illustrate the roots—and results—of Mexico’s manufacturing prowess, consider that on a productivity-adjusted basis, the average Mexican manufacturing wage could be 30% lower than China’s by the end of 2015, while Mexico’s booming auto sector is projected to produce 3.2 million automobiles in 2014, and 4.7 million per year by 2020—a 47% increase.

Mexico’s power sector gas demand is expected to climb from 3.5 BCF/d in 2014 to 5.4 BCF/d by 2024, as electricity demand rises and gas-fired plants’ share of total power generation in Mexico increases from less than 50% now to nearly 70% by 2027, according to the Mexican Secretariat of Energy.

As Mexico’s gas demand climbs, it will continue to favor low-cost U.S. shale gas supplies over expensive LNG imports. Indeed, even the Mexican Secretariat of Energy projects that Mexican LNG consumption will grow very little after 2015 despite gas consumption rising nearly 75% by 2027 from the current level.

While Mexico is moving to stimulate private and foreign investment in oil & gas development, established U.S. shale gas producers will likely remain Mexico’s core gas suppliers for at least the next decade as low-cost U.S. supplies flood in through Los Ramones and other cross-border pipelines. Asian markets will buy significant volumes of U.S. LNG when exports commence in late 2015/early 2016, but for the next several years at least, growing cross-border pipeline capacity will make Mexico the largest and steadiest customer for U.S. gas exports.